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EUR/USD: don’t fight the trend

FXStreet (Guatemala) - EUR/USD is trading at 1.2607, down -0.19% on the day, having posted a daily high at 1.2640 and low at 1.2584.

EUR/USD has remained in a tight range and is likely sidelined as we await the forthcoming ECB this week. However, the message from Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank is to not fight the trend. She explained that since May 7th (the day before the May ECB meeting where President Draghi pre‐committed to action at the June meeting), EUR has lost 9% against the USD. "The trend is strong and it is too early to attempt to pick a bottom. During recent periods of EUR weakness the currency has typically dropped close to 20% ‐ see chart which highlights the 22% drop in 2008, the 21% drop in late 2009/early 2010, the 19% drop in late 2011/early 2012, and the current 9% fall. Accordingly the downside potential for EUR remains significant."

EUR/USD short‐term technicals:

Camilla Sutton explained that they are bearish. “Even with the currency well into oversold territory, we would not fight the strong downward trend. The next level of support lies at 1.2550; while resistance comes in at 1.2620."

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